OneWater Marine Inc. (ONEW) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects strong financial performance with improved gross margins, reduced net loss, and increased EBITDA. Inventory and liquidity are well-managed, and industry trends are stabilizing. Positive consumer interest in new boat models and a disciplined cost approach further enhance the outlook. While some uncertainties exist in the Q&A, such as vague responses about pandemic-era buyers, the overall sentiment remains positive due to improved margins and optimistic guidance.
Key Financial Performance
Revenue Fiscal first quarter revenue was $381 million, representing a 1% increase compared to the $376 million in the prior year period. The increase was attributed to higher Pre-Owned Boat sales and growth in Service, Parts, and Other revenue.
New Boat Sales New Boat sales were down 6% compared to the prior year. This decline was due to softer demand in the New Boat segment.
Pre-Owned Boat Sales Pre-Owned Boat sales were 24% higher year-over-year, driven by both increased unit sales and higher average unit prices.
Service, Parts, and Other Revenue Service, Parts, and Other revenue grew by 10% compared to the prior year period, reflecting improvements in the distribution segment and the strength of service operations.
Gross Profit First quarter gross profit increased to $89 million compared to $84 million in the prior year period. Gross profit margin expanded to 23.5%, an improvement of 110 basis points, driven by higher margins on New Boats, increased Pre-Owned Boat sales volumes, and portfolio optimization efforts.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses totaled $81 million compared to $79 million in the prior year period. The increase was due to higher variable expenses, including sales commissions, which rose due to higher gross margins on Boats Sold.
Net Loss Net loss for the quarter totaled $8 million or $0.47 per diluted share compared to a net loss of $14 million or $0.81 per diluted share in the prior period. The improvement was largely driven by a $13 million income tax benefit in the quarter compared to a $5 million income tax benefit in the prior year period.
Adjusted EBITDA Adjusted EBITDA increased to $4 million compared to $2 million in the prior year, reflecting improved operational performance.
Inventory Total inventory decreased to $602 million as of December 31, 2025, compared to $637 million as of December 31, 2024. This decrease was due to inventory reclassified as held for sale and disciplined inventory optimization.
Liquidity Total liquidity was approximately $46 million, including $32 million of cash and cash equivalents plus availability on credit facilities.
Long-Term Debt Long-term debt was $399 million as of the quarter end, with net debt representing 5.1x trailing 12-month adjusted EBITDA.
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Operating Highlights
New Boat Sales: Sales were down 6% compared to the prior year.
Pre-Owned Boat Sales: Sales increased by 24%, driven by both increased unit sales and average unit price.
Service, Parts, and Other Revenue: Grew by 10% compared to the prior year period, demonstrating strength in service operations and customer loyalty.
Inventory Levels: Inventory levels are healthy with a strong mix of new boats across premium brands. Trade-in availability has improved, supporting growth in Pre-Owned Boat sales.
Industry Outlook: The industry is expected to be flat to down low single digits year-over-year, but the company anticipates outperforming the industry.
Gross Profit Margin: Expanded to 23.5%, an improvement of 110 basis points compared to the prior year quarter.
Adjusted EBITDA: Increased to $4 million compared to $2 million in the prior year.
Net Loss: Reduced to $8 million compared to $14 million in the prior year.
Inventory Optimization: Disciplined inventory optimization led to a decrease in total inventory to $602 million from $637 million in the prior year.
Portfolio Optimization: Decided to sell certain distribution segment assets that are no longer core to the long-term strategy, aiming to simplify the business and strengthen the balance sheet.
Brand Rationalization: Completed strategic brand initiatives, leading to better-than-expected gross margins and long-term benefits.
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Risk or Challenges
Competitive Environment: The company operates in a highly competitive environment, which could impact its ability to maintain or grow market share.
Inventory Optimization: Strategic inventory initiatives and optimization efforts may lead to variability in financial performance, particularly in gross margins.
Distribution Segment Divestiture: The decision to sell certain distribution segment assets introduces risks related to the successful completion of the transaction and potential impacts on financial flexibility.
Commodity Product Margins: Variability in commodity product margins within the distribution segment could negatively affect overall profitability.
Debt Leverage: The company has a long-term debt position of $399 million, representing 5.1x trailing 12-month adjusted EBITDA, which could pose financial risks if not managed effectively.
Seasonality: The first quarter is seasonally slower, which could impact financial performance and operational efficiency.
Economic and Market Conditions: Flat to low single-digit declines in the industry are expected, which could impact the company's sales and profitability.
Regulatory and Tariff Environment: While currently stable, any changes in tariffs or regulatory conditions could impact customer sentiment and financial performance.
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Guidance & Outlook
Inventory and Market Position: The company is operating from a position of strength with a healthy inventory mix and age profile. Inventory across the industry is normalizing, and trade-in availability is improving, supporting growth in Pre-Owned Boat sales.
Gross Margins: Gross margins are expected to improve by 100 basis points for New Boat sales over the year, driven by strategic initiatives and favorable model mix. However, there will be some variability quarter-to-quarter.
Portfolio Optimization: The company plans to sell certain distribution segment assets that are not core to its long-term strategy. Proceeds from the transaction are expected to enhance financial flexibility and support capital allocation priorities. The transaction is expected to close before March 31, 2026.
Revenue and EBITDA Guidance: Total sales are projected to be in the range of $1.83 billion to $1.93 billion for fiscal year 2026. Adjusted EBITDA is expected to range between $65 million and $85 million, with adjusted earnings per diluted share between $0.25 and $0.75.
Industry Outlook: The industry is expected to be flat to down low single digits year-over-year. The company anticipates outperforming the industry but expects flat same-store sales due to brand rationalization headwinds.
Capital Allocation and Leverage: Reducing leverage remains a top priority. Proceeds from asset sales will be applied toward credit facility repayment, and the company is focused on reducing balance sheet leverage throughout the year.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is causing the mix shift towards pre-owned boats?
A:The shift is due to better availability of pre-owned boats. During COVID, many pre-owned boats were sold person-to-person instead of through dealerships. Now, with reduced time lags, more trades are coming through dealerships, increasing availability for consumers.
Q:What is the outlook for year-end net leverage and inventory?
A:Net leverage is expected to decrease to almost 4x by the end of the March quarter and under 4x by year-end, aided by the sale of distribution assets. Inventory is currently in good shape and will be managed based on retail trends. Long-term, the industry is expected to move back towards a long-term average of 180,000 new units from the current 145,000 units.
Q:How has the boat show season been so far?
A:The boat show season has been flat to slightly down, but consumer enthusiasm remains. Margins have been better than expected due to model mix and limited competition for new, popular units. The year is expected to be flat to slightly up, with a focus on margins.
Q:Are consumers trading boats to buy another boat, or are pandemic-era buyers exiting the industry?
A:Consumers trading boats are generally doing so to buy another boat. The uptick in trade-ins began last year as consumers could get new boats quicker, reducing the time they spent using or selling their old boats.
Q:How fresh is the current inventory compared to previous quarters?
A:The inventory is in the best shape it has been in years, with minimal aged or dated inventory. Premium dealers are in a good position, though there is still some cleanup needed in the value segment of the industry.
Q:What impact has the recent storm and cold weather had on the business?
A:The storm and cold weather have had minimal impact as the affected areas are not significant markets for the company. It is also not boating season, so there has been no material effect on operations or boat show traffic.
Q:Are buyers becoming more agnostic to higher prices?
A:Not necessarily. The cleaner inventory and reduced panic selling have led to more disciplined pricing. While it is still a buyer's market, there is less pressure to offer steep discounts compared to the past.
Q:What is the expected cadence of margin benefits throughout the year?
A:Margins are expected to improve as inventory cleans up, but promotional dollars from manufacturers may decrease as production ramps up. The company expects at least a 1% margin improvement this year, though there may be some choppiness due to market dynamics.
Q:Did the government shutdown in the middle of the quarter have any impact?
A:No, the government shutdown did not have any adverse impact on the business.
Q:Are monthly payment buyers returning during early season boat shows?
A:Most customers in the premium space are not monthly payment buyers, though 60-65% finance some portion of their purchase. Lower-end, price-sensitive consumers tend to buy value products, which the company does not sell in large volumes.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about whether pandemic-era buyers are exiting the industry, instead focusing on the dynamics of trade-ins and inventory availability. Additionally, the response to the question about the impact of the storm on boat show traffic was vague, with no specific data or insights provided.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Boat basis
Boat sale
CRM inventory
Difficulty model
Executive Chairman
Inventory industry
New Boat
OEM partner
Officer Factors
OneWater gain
Pre Boat
Revenues store
Singleton
Technical Difficulty
action portfolio
action reflection
addition trade
age profile
allocation priority
area fit
asset term
availability Pre
benefit action
benefit brand
boat dream
condition
distribution segment
effort
focus
mix
position strength
profitability
sale inventory
season
variability
ONEW Transcript
OneWater Marine Inc. (ONEW) Q1 2026 Earnings Call Transcript
Positive1-29
The earnings call reflects strong financial performance with improved gross margins, reduced net loss, and increased EBITDA. Inventory and liquidity are well-managed, and industry trends are stabilizing. Positive consumer interest in new boat models and a disciplined cost approach further enhance the outlook. While some uncertainties exist in the Q&A, such as vague responses about pandemic-era buyers, the overall sentiment remains positive due to improved margins and optimistic guidance.
OneWater Marine Inc. (ONEW) Q4 2025 Earnings Call Transcript
Unknown11-13
The earnings report shows mixed results: strong pre-owned sales and same-store sales growth, but significant net losses due to noncash impairments. The raised revenue outlook and improving consumer rates are positives, but unclear management responses and high net leverage pose concerns. The Q&A section reveals stable margins and positive trends in trade-ins, yet lacks specifics on M&A timelines. Given these factors, the stock reaction is likely neutral, as positives are balanced by uncertainties and financial health issues.
OneWater Marine Inc. (ONEW) Q3 2025 Earnings Call Transcript
Unknown7-31
The earnings call reveals mixed results: a slight revenue increase despite industry declines, but lower new boat sales and higher expenses. The Q&A highlights positive trends in the premium segment and used boat growth, but concerns persist about competitive pressures and debt levels. The strategic focus on inventory and brand rationalization is positive, yet high leverage and declining margins weigh negatively. Overall, the sentiment is neutral due to offsetting positive and negative factors.
OneWater Marine Inc. (NASDAQ:ONEW) Q2 2025 Earnings Call Transcript
Unknown5-2
Despite outperforming the industry in unit sales, OneWater Marine Inc. missed EPS expectations and faced declining same-store sales and gross margin challenges. Macroeconomic uncertainty, inflationary pressures, and tariff concerns further cloud the outlook. Although pre-owned sales increased, new boat sales declined, and the company updated its guidance downward. The Q&A session revealed strategic discounting and unclear management responses, adding to investor concerns. The lack of a share repurchase program and high leverage also weigh negatively on sentiment. Overall, these factors suggest a negative stock price reaction in the coming weeks.
ONEW Report
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